Iowa Governor Terry Branstad speaks to the crowd at the Vicksburg National Military Park in Vicksburg, Mississippi, May 25, 2013. REUTERS/Therese Apel

By Kay Henderson

DES MOINES, Iowa (Reuters) - Iowa has reached a tentative agreement with federal officials on a plan to expand the number of low-income state residents eligible for Medicaid under President Barack Obama's healthcare reform law, Iowa's governor said on Thursday.

The two sides have been negotiating for months over the details of the "Iowa Health and Wellness Plan," which will eventually offer coverage to more than 150,000 residents.

"This is an Iowa plan that fits the health needs of our state," Republican Governor Terry Branstad said in a statement.

Iowa is among 26 states and the District of Columbia that are expanding Medicaid coverage in 2014, according to the Kaiser Family Foundation, a healthcare policy group.

Expansion of Medicaid, the healthcare program for the poor, is an important part of Obama's healthcare law, which aims to ensure that all Americans have access to affordable health insurance.

Under the agreement, the federal government will pay 100 percent of the costs of the Iowa expansion for three years and not less than 90 percent thereafter.

On Tuesday, federal officials granted Iowa a waiver for its version of Medicaid expansion. Branstad had wanted to collect monthly premiums from newly enrolled recipients but the waiver forbade the state from collecting money from people with incomes at or below the poverty line.

Branstad announced on Thursday that the two sides now agreed that there could be premium contributions for certain plan members, but details about how this would work were not immediately available.

Specific final terms of the deal were still being worked out between the state and the U.S. Department of Health and Human Services, Branstad's statement said. A representative for the Centers for Medicare and Medicaid Services was not immediately available for comment.